A survey of North American equities heading in both directions
On the rise
BlackBerry (BB-T) forecast profit for its next fiscal year above market estimates and said it was exploring options for its Cylance business, sending shares of the Waterloo, Ont.-based company 4.7 per cent higher on Wednesday.
In an investor day presentation, the company said it was looking to redirect spending to high-growth areas from Cylance, which requires significant levels of investment and faces strong competition.
It expects Cylance, which uses machine learning to preempt security breaches, to post an adjusted core loss of US$51-million for the current fiscal year.
BlackBerry — once a dominant force in the smartphone market — has transitioned into selling software for devices and autonomous vehicles and bought Cylance in 2019 for US$1.4-billion.
The Canadian firm said it plans to increase capital allocation to its secure communications and internet of things (IoT) businesses, as both of them are profitable and key growth drivers. The company is in the process of separating the IoT and cybersecurity businesses into fully independent divisions. In July, Blackberry appointed insider Tim Foote as its finance chief.
It forecast fiscal 2026 adjusted earnings before interest, tax, depreciation and amortization (EBITDA) to be about US$50-million to US$60-million, compared with analysts’ expectations of US$47.8-million.
The company also maintained its current annual revenue outlook of between US$591-million to US$616-million and EBITDA forecast of up to US$10-million.
It expects IoT revenue to be in the range of US$225-million to US$235-million in fiscal year 2025, compared with US$215-million last year.
Shares of Canadian miner Lithium Americas (LAC-T) soared 22.2 per cent after it said on Wednesday General Motors (GM-N) will contribute US$625-million to their new joint venture for developing the Thacker Pass project in Nevada.
U.S. automakers are ramping up their output of EVs and hybrids and aiming to reduce their reliance on China for battery-related materials in a competitive market.
The Vancouver-based firm said GM will acquire a 38-per-cent asset-level ownership stake in Thacker Pass for US$625-million, which includes US$430-million of direct cash funding to support the construction of Phase 1 and a US$195-million letter of credit facility.
The new agreement replaces the delayed investment worth US$330-million in August by both companies.
Earlier this year, the U.S. Department of Energy had planned to lend Lithium Americas up to US$2.26-billion to build the Thacker Pass lithium project, which holds enough of the battery metal to build 1 million electric vehicles annually.
The company said it expects to close the DOE loan in the next few weeks and intends to make the final investment decision for the project by the end of the year.
Initial construction at the site in Humboldt County, just south of Nevada’s border with Oregon, started in March 2023 after Lithium Americas won a long-running and complex court case against conservationists, ranchers and Indigenous communities.
The lithium miner said GM will also enter into an additional 20-year offtake agreement for up to 38 per cent of production from Phase 2 of Thacker Pass, upon closing of the transaction.
First Quantum Minerals (FM-T) rose 2.4 per cent on reports Saudi Arabia’s Manara Minerals is closing in on a deal to buy a minority stake in its’ Zambian copper and nickel assets.
Manara, a joint venture between Saudi Arabian mining company Ma’aden and its US$925-billion Public Investment Fund, is in advanced talks to acquire between 15-per-cent and 20-per-cent equity in the Zambian assets, the sources said. The stake could be worth between US$1.5-billion and US$2-billion, sources told Reuters.
First Quantum’s sale of a stake in the Zambian assets could be concluded by year-end, the sources said. There is no certainty that a deal will be signed as the negotiations are ongoing, they added.
The potential deal is in the spotlight as copper is a much sought-after element for the clean energy transition due to its uses in the manufacture of electric cars and data centers powering artificial intelligence.
First Quantum earlier this year said it was in talks with potential investors to sell a partial stake in the Zambian mines, while also exploring the sale of its Spanish mine Las Cruces to raise capital and cut debt after the Panama government ordered the shutdown of its flagship Cobre Panama mine.
Manara has emerged as a front runner for the purchase as the Saudi firm’s strategy to acquire a minority interest fits with First Quantum’s aim to retain a majority stake in the mines, said the sources, who did not wish to be quoted as they are not authorized to speak with media.
First Quantum owns the Kansanshi and Sentinel copper mines in Zambia, which have become key to future output after Cobre Panama’s shutdown. First Quantum also owns the Enterprise nickel mine in the country.
Morgan Stanley’s (MS-N) profit surpassed estimates on a bumper third quarter for investment banking that had also buoyed rivals, sending its shares up 6.5 per cent.
A revival in corporate debt issuance, initial public offerings (IPOs) and mergers has bolstered profits for Wall Street banks this year.
As markets hover near record highs and the U.S. Federal Reserve begins its policy-easing cycle, bankers expressed optimism that mergers and acquisitions will continue to recover after a two-year drought.
Morgan Stanley benefited from a “constructive environment,” CEO Ted Pick said in a statement. “Institutional securities saw momentum in the markets and underwriting businesses on solid client engagement.”
Its investment banking revenue jumped 56 per cent in the third quarter. Competitors Goldman Sachs had posted a 20-per-cent surge in fees, while JPMorgan Chase saw a 31-per-cent gain.
Morgan Stanley’s profit jumped to US$1.88 per share, exceeding analyst views of US$1.58, according to estimates compiled by LSEG.
Across the industry, global investment banking revenue rose 21 per cent in the first nine months of the year, led by a 31-per-cent surge in North America, according to data from Dealogic.
Morgan Stanley earned the fourth highest fees globally over the same period, the data showed.
It was a lead underwriter on big initial public offerings in the quarter, including by cold storage giant Lineage and airplane engine maintenance services provider StandardAero .
“We are seeing a rise in equity capital markets activity led by financial sponsors, not only for IPOs in the U.S. but also in Europe,” Morgan Stanley CFO Sharon Yeshaya said in a phone interview.
The institutional securities business, which houses investment banking and trading, generated revenue of US$6.82-billion, compared with US$5.67-billion a year ago.
Equity trading revenue was another bright spot, jumping 21 per cent as stocks rallied. Fixed-income revenue rose 3 per cent.
The investment bank’s profit climbed to US$3.19-billion from US$2.41-billion a year earlier.
“The company is executing very well across all the segments... Ted Pick has quickly built a leadership presence and confidence from investors,” said Macrae Sykes, portfolio manager at Gabelli Funds.
U.S. Bancorp (USB-N) beat estimates for third-quarter profit on Wednesday, helped by higher-than-expected interest income, sending the bank’s shares up 4.7 per cent.
The U.S. Federal Reserve kept interest rates at their highest levels in two decades until September, which helped banks rake in more money on loans given to customers.
U.S. Bancorp’s net interest income, the difference between what banks pay customers on deposits and earn as interest on loans, was US$4.14-billion for the quarter ending Sept. 30, above analysts’ expectation of US$4.04-billion, according to estimates compiled by LSEG.
However, its interest income fell 2.4 per cent from last year.
The banking industry increased provisions for losses from bad loans as high interest rates heighten the risk of default on mortgages and credit-card debt by borrowers.
U.S. Bancorp’s provisions for credit losses rose to US$557-million in the third quarter, versus US$515-million a year earlier.
Net income attributable to U.S. Bancorp common shareholders came in at US$1.60-billion or US$1.03 per diluted share, on an adjusted basis, in the reported quarter, beating analysts’ estimate of US$1.54-billion or 99 US cents per diluted share.
United Airlines (UAL-Q) gained over 12 per cent as it forecast a stronger-than-expected profit in the current quarter on Tuesday, after third-quarter earnings topped Wall Street expectations on improved pricing power.
In a sign of growing confidence in its business, the Chicago-based airline also announced a US$1.5 billion-share buyback program - its first since the COVID-19 pandemic.
United said it expects an adjusted profit of US$2.50 to US$3 per share in the quarter through December. Analysts expect the company to report a quarterly profit of US$2.68 a share, according to LSEG data.
United reported adjusted third-quarter earnings of US$3.33 a share, compared with analysts’ expectations of US$3.17.
The airline said its domestic unit revenue, a proxy for pricing power, turned positive in August and September from a year ago.
An excess supply of airline seats in the domestic market during the summer travel season had forced carriers to discount fares, hurting their earnings.
U.S. airlines have moderated capacity since then. Annual domestic seat growth has slowed to 1.5 per cent in October and November from 5.5 per cent in July, according to analysts at BofA.
“As predicted, unproductive capacity left the market in mid-August, and we saw a clear inflection point in our revenue trends that propelled United to exceed Q3 expectations,” United CEO Scott Kirby said in a statement.
U.S. trucking firm J.B. Hunt Transport Services (JBHT-Q) reported third-quarter profit above Wall Street estimates on Tuesday, helped by improving volumes in its largest segment, intermodal.
Shares of the company were up 3.2 per cent in Wednesday trading.
The intermodal segment, also known as JBI, which involves shipping goods via two or more means of transport, saw a rise due to higher imports and better rail services. It also helped the company partially offset a decline in prices.
The company reported a 5-per-cent year-over-year increase in intermodal volumes, propelling its JBI segment to post a revenue of US$1.56-billion.
The Arkansas-based company posted a quarterly revenue of US$3.07-billion, compared to analysts’ estimate of $3.02 billion, according to data compiled by LSEG.
It reported a profit of US$1.49 per share. Analysts were expecting the company to report a profit of US$1.41 per share.
On the decline
Toronto-based Barrick Gold (ABX-T) closed down 1.7 per cent after saying it produced lower-than-expected gold in the third quarter because of a fall in output at its Carlin and Cortez mines in Nevada.
Carlin and Cortez mines are a part of Nevada Gold Mines, which is Barrick’s joint venture with rival Newmont (NGT-T)
Total gold output at Nevada Gold Mines fell to 385,000 ounces in the July-September quarter, compared with 401,000 ounces in the preceding three months.
The world’s second-largest gold producer, however, expects a “materially stronger fourth quarter.” An operational expansion at Carlin mine, completed during a shutdown in the third quarter, would support higher throughput and recoveries in the last quarter of the year, the company said.
Barrick’s total preliminary output stood at 943,000 ounces of gold in the third quarter, compared with analysts’ estimate of 975,000 ounces, according to data compiled by LSEG.
The company expects all-in sustaining costs (AISC) for gold, an industry metric used to express total expenses, to rise at least 2 per cent over the previous quarter’s US$1,498 per ounce. Analysts’ estimate was US$1,491 for the three months ended Sept. 30.
Barrick also reported preliminary copper output of 48,000 tons in the third quarter, compared with 43,000 tons in the previous three months, driven by higher output at its Lumwana mine in Zambia.
The miner is scheduled to release its third-quarter results on Nov. 7.
Analysts expect Barrick to post an adjusted profit of 35 US cents per share during the period, compared with 24 US cents it earned a year earlier, mainly boosted by higher bullion prices.
Gold prices jumped 13 per cent in the quarter, their best since early 2020, driven by the U.S. Federal Reserve’s interest rate cut and demand for safe haven due to heightened tensions in the Middle East.
Burnaby, B.C.-based Interfor Corp. (IFP-T) slid 1.6 per cent on news it is selling its three manufacturing facilities in Quebec and closing its corporate office in Montreal as the lumber producer plans to leave the province and focus on other parts of the company.
Interfor chief executive Ian Fillinger says the decision to exit its Quebec operations was influenced by recent developments that have restricted the availability of economic fibre, including record forest fires in 2023.
The company says it has signed a deal to sell its sawmills in Val-d’Or and Matagami as well as its Sullivan remanufacturing plant in Val-d’Or, along with all associated forestry and business operations, to Chantiers Chibougamau Ltee (CCL) for $30-million in cash.
Interfor and CCL will also enter into a multi-year contract for the supply of machine stress rated lumber to Interfor’s I-Joist engineered wood products facility in Sault Ste. Marie, Ont.
Interfor says it expects to take an impairment charge in its third quarter associated with the announcement.
The sale does not include any countervailing or anti-dumping duty deposits related to the ongoing U.S.-Canada softwood lumber trade dispute.
Intel (INTC-Q) products sold in China should be subject to a security review, the Cybersecurity Association of China (CSAC) said on Wednesday, alleging the U.S. chipmaker has “constantly harmed” the country’s national security and interests.
The company’s shares were down 1.5 per cent amid a broad tech sell-off following a disappointing update from chip equipment maker ASML (ASML-Q).
While CSAC is an industry group rather than a government body, it has close ties to the Chinese state and the raft of accusations against Intel, published in a long post on its official WeChat account, could trigger a security review from China’s powerful cyberspace regulator, the Cyberspace Administration of China (CAC).
“It is recommended that a network security review is initiated on the products Intel sells in China, so as to effectively safeguard China’s national security and the legitimate rights and interests of Chinese consumers,” CSAC said.
Last year, CAC barred domestic operators of key infrastructure from buying products made by U.S. memory chipmaker Micron Technology Inc. (MU-Q) after deeming the company’s products had failed its network security review.
A similar security review on Intel products could negatively impact the company’s revenues, over a quarter of which came from China last year.
The allegations come at a time when China is dealing with a U.S.-led effort to restrict its access to crucial chipmaking equipment and components, in what Washington calls a bid to halt the modernization of China’s military.
With files from staff and wires